product management and new-product development
DESCRIPTION
At the end of this presentation, you should be able to: This slide refers to material on p. 234. understand how product life cycles affect strategy planning. describe what is involved in designing new products and what “new products” really are. understand the new-product development process. appreciate the team effort that goes into new-product development. understand the need for product or brand managers. understand how total quality management can improve goods and services. understand important new terms. At the end of this presentation, you should be able to: understand how product life cycles affect strategy planning. describe what is involved in designing new products and what “new products” really are. understand the new-product development process. appreciate the team effort that goes into new-product development. understand the need for product or brand managers. understand how total quality management can improve goods and services. understand important new terms.TRANSCRIPT
Chapter 9Product Management and New-Product Development
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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At the end of this presentation, you should be able to:1. understand how product life cycles affect strategy
planning.2. describe what is involved in designing new products
and what “new products” really are.3. understand the new-product development process.4. appreciate the team effort that goes into new-
product development.5. understand the need for product or brand
managers.6. understand how total quality management can
improve goods and services.7. understand important new terms.
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New Product Development
• 5 Step Process• Success factors
The Role of Product Management and New-Product Development in Marketing Strategy (Exhibit 9-1)
Chapter 8: Elements of
Product Planning for Goods &
Services
Managing brands• Product
managers• Managing
product quality
The Product Life Cycle Development
• Stages• Strategy planning
for stages
Chapter 9: Product Management & New- Product Development
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Total industry profit (initially loss)
Total industry
sales
Typical Life Cycle of a New Product Concept (Exhibit 9-2)
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Market Introduction—Investing in the Future
Low salesInformati
ve promotio
nInvest for
future profits
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Market Growth Stage—Profits Go Up and Down
Monopolistic Competition Develops
Innovation Attracts Competition
Profits Peak and Then Decline
Don’t Ignore Long-Term Competitive Trends!
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Market Maturity Stage—Sales Level Off, Profits Continue Down
Persuasive, More Costly Promotion
Brands Are More Similar
Greater Price Competition/Price
Sensitivity
Maturity May Last a Long Time
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Sales Decline —A Time of Replacement
New products
replace the old
Price competition from dying products
Conservative buyers
switch late to new
products
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Which Stage of PLC?
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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Checking Your Knowledge
Kodak announced that it would no longer produce 35 millimeter film cameras, but would manufacture digital cameras exclusively. Sales of digital cameras have grown steadily and have far outpaced the sale of 35 mm cameras in recent years, even among professional photographers. Kodak’s decision indicates that 35 mm cameras are probably in the ________ stage of the product life cycle.
A. Market introductionB. Market growthC. Sales declineD. Market maturity
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Product Life Cycles Should Be Related to Specific Markets
AND
IndividualBrands
• May not follow the classic pattern
• May be introduced in market growth or maturity
• Not all brands are equally strong
MarketDefinitions
• Should be carefully developed
• Different markets, different stages
• Contribute to the length of the cycle
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Product Life Cycles Vary in Length
Trialability
Easy to CommunicateCompatibility
Products that move
quickly through early life
cycle stages
Comparative Advantage Easy to Use
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Interactive Exercise: Adoption
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Other Issues in Product Life Cycle Length
Pioneer or follower? Which strategy works best?
Product Life Cycles Are Getting Shorter
Fashions and Fads
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Changes in Marketing Mix Across the Product Life Cycle (Exhibit 9-3)
Product
Price
Promotion
Place
Competitive Situation
One or few
Skimming or penetration
Pioneering, informing
Build channels, maybe selective distribution
Monopoly or monopolistic competition
Variety, build brand familiarity
Meet competition or price dealing
Inform & persuade
Monopolostic competition or
oligopoly
Market Introduction Market Growth
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Changes in Marketing Mix Across the Product Life Cycle (Exhibit 9-3)
Product
Price
Promotion
Place
Competitive Situation
Battle of the brands
Meeting competition or price cuts and deals
Persuading and then reminding
Move toward more intensive distribution
Monopolistic competition or oligopoly – heading toward pure competition
Some drop out
Market Maturity Sales Decline
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Managing Mature Products
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Phasing Out Dying Products
Don’t Pull the Plug So Quickly
Phase-out May Be Necessary
ProfitabilityProduct Line
Customer Support Sales Decline
Can Be Profitable
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New Product Planning
What Is a New Product?
FTC Rule: 6 Months
Ethical Dilemmas Exist
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New Product
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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New-Product Development Process (Exhibit 9-4)
2. Screening
3. Idea evaluation
4.Development
5. Commercial-
ization
1. Idea generation
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Step 1: Idea Generation1. Idea
generation
2. Screening
3. Idea evaluation
4.Development
5. Commercial-
ization
Ideas from:• customers and users• marketing research• competitors• other markets• company people,
intermediaries, etc.
1. Idea generation
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Step 2: Screening1. Idea
generation
2. Screening
3. Idea evaluation
4.Development
5. Commercial-
ization
• Strengths and weaknesses
• Fit with objectives• Market trends• Rough ROI estimate
2. Screening
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Step 3: Idea evaluation1. Idea
generation
2. Screening
3. Idea evaluation
4.Development
5. Commercial-
ization
• Concept testing• Reactions from
customers• Rough estimates of
costs, sales, and profits
3. Idea Evaluation
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Step 4: Development1. Idea
generation
2. Screening
3. Idea evaluation
4.Development
5. Commercial-
ization
• R&D• Develop model or
service• Test marketing mix• Revise plans as
needed• ROI estimate
4. Development
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Step 5: Commercialization1. Idea
generation
2. Screening
3. Idea evaluation
4.Development
5. Commercial-
ization
• Finalize product and marketing plan
• Start production and marketing
• “Roll out” in select markets
• Final ROI estimate
5. Commercialization
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Checking Your Knowledge
Top management of a large company recently approached the dean of a major business school about starting a specialized MBA program for the company’s employees. After further discussions, the dean decided that the program did not fit well with the objectives and resources of the school, so the program was put on the “back burner” until conditions changed. The proposed MBA program was at what stage of the new-product development process when it was shelved?
A. Idea generationB. ScreeningC. Idea evaluationD. DevelopmentE. Commercialization
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New Product Development: A Total Company Effort (Exhibit 9-5)
A basis for superior
customer value
New-product success
Effective transition to
regular operations
Complete marketing
plan
Effective design
Organized new-product
development process
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New Product Development: A Total Company Effort (Exhibit 9-5)
Organized new-product development process
Top management
support
Culture of innovation
Product champion
with authority
Cross-functional
team
Clear understanding
of customer needs
Cost management
(costs add value)
Timely development
cycle
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Checking Your Knowledge
Which of the following statements about new-product development are true?
A. The process should be informal to encourage innovation.B. The greatest number of product ideas is in the idea evaluation stage.C. The best criteria for evaluating new product ideas
in the early stages is return on investment (ROI).D. The process should have top management support.E. All of the above statements are true.
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Need for Product Managers
Common in Large Companies
Product/Brand Managers
Some Are “Product Champions”
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Managing Product Quality
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Building Quality into Services
Training Is Crucial
Server Is Linked to the Service
Empowerment Works
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Other Issues in Quality Implementation Efforts
Specify Jobs and Measure Performance
Get a Return on Quality
Managers Lead the Effort
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You should now be able to:
1. understand how product life cycles affect strategy planning.
2. describe what is involved in designing new products and what “new products” really are.
3. understand the new-product development process.4. appreciate the team effort that goes into new-
product development.5. understand the need for product or brand
managers.6. understand how total quality management can
improve goods and services.7. understand important new terms.
Key Terms
1. product life cycle2. market introduction3. market growth4. market maturity5. sales decline6. fashion7. fad8. new product9. Federal Trade
Commission (FTC)
10. Consumer Product Safety Act
11. product liability12. concept testing13. prototype14. product managers15. brand managers16. total quality
management (TQM)17. continuous
improvement18. empowerment
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